- This topic has 2 replies, 2 voices, and was last updated 1 year ago by
.
- Posts
Dear Sir,
A company neither import or export. However, when its currency value goes up, that company’s sales decrease.
My question is: but why it doesn’t import or export (just sale inside the country), so its sales must remain constant, musn’t it?
I’m looking forward to your response,
InissThe company might no import or export, but a competitor might be importing the goods it sells.
For example, consider a competitor company in the UK importing goods that cost it $120. If the exchange rate If currently £1 = $1.2, then the company would have to pay 120/1.2 = £100. If the £ strengthened so that the exchange rate became £1 = $1.5, the competitor would have to pay 120/1.4 = £80. The competitor can now buy more cheaply and can sell more cheaply too thus competing more strongly and causing other company’s to lose sales.
- The topic ‘Effects on sales if currency value goes up’ is closed to new replies.